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Canadian Dollar Forecast: USD/CAD Plunge Marks Fifth Week– NFP on Tap

Canadian Dollar Forecast: USD/CAD Plunge Marks Fifth Week– NFP on Tap

Michael Boutros, Strategist

Canadian Dollar Technical Price Outlook: USD/CAD Weekly Trade Levels

  • Canadian Dollarupdated technical trade levels - Weekly Chart
  • USD/CAD Five-week breakdown approaching initial support hurdles – NFP / Canada Employment on tap
  • Support objectives at 1.2137/56 & 1.2048- Resistance 1.2358, bearish invalidation 1.2619

The Canadian Dollar has surged more than 3.7% against the US Dollar since the April highs in USD/CAD with the exchange rate now poised to mark a fifth consecutive weekly decline. The price breakdown takes Loonie towards initial technical hurdles into the May open with US Non-Farm Payrolls and Canada employment data on tap. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical price chart. Review my latest Strategy Webinar for an in-depth breakdown of this Loonie technical setup and more.

Canadian Dollar Price Chart – USD/CAD Weekly

Canadian Dollar Price Chart - USD/CAD Weekly - Loonie Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview

Notes: In last month’s Canadian Dollar Weekly Price Outlook we discussed USD/CAD’s approach towards the upper-bounds of the April opening-range range, just below a key resistance pivot around the 1.26-handle. We noted weekly support at the, “61.8% Fibonacci retracement of the March advance at 1.2473 with a break / weekly close below 1.2358 needed to mark resumption of the broader downtrend towards the 2017 low-week close at 1.2156.” Price briefly registered an intra-week high at 1.2653 before reversing sharply lower with USD/CAD now threatening a break below downtrend support.

Initial weekly support steady at 1.2138/56- a region defined by the 100% extension of the decline off the yearly highs and the 2018 low-week close- looking for a reaction there IF reached with a break / close below needed to keep the immediate short-bias viable targeting 1.2048 and the May 2015 low at 1.1919. Weekly resistance now back at 1.2358 with broader bearish invalidation steady at 1.2579-1.2619.

Bottom line: The USD/CAD breakdown is approaching initial support hurdles just lower and we’re looking for possible inflection early in the month. From a trading standpoint, look to reduce short-exposure / lower protective stops on a stretch towards 1.2137/56- rallies should be capped by 1.2358 IF price is indeed heading lower. Keep in mind NFPs and Canada Employment are releases simultaneously tomorrow – stay nimble into the releases. Review my latest Canadian Dollar Price Outlookfor a closer look at the near-term USD/CAD technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Canadian Dollar Trader Sentiment – USD/CAD Price Chart

Canadian Dollar Trader Sentiment - USD/CAD Price Chart - Loonie Retail Positioning - Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long USD/CAD - the ratio stands at +2.96 (74.73% of traders are long) – typically bearish reading
  • Long positions are4.15% lower than yesterday and 9.49% higher from last week
  • Short positions are 50.53% higher than yesterday and 37.94% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CAD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/CAD price trend may soon reverse higher despite the fact traders remain net-long.


US / Canada Economic Calendar

US / Canada Economic Calendar - USD/CAD Key Data Releases - NFP - Canada Employment

Economic Calendar - latest economic developments and upcoming event risk.

Previous Weekly Technical Charts

--- Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.